empty
19.02.2025 07:21 PM
GBP/USD Analysis – February 19th

This image is no longer relevant

The wave pattern for GBP/USD remains somewhat ambiguous but generally clear. There is still a high probability of a long-term downward trend, though some uncertainty surrounds the assumed wave 2 in 1, which appears unconvincing. However, wave 5 looks well-defined, leading to the conclusion that the larger wave 1 is complete. If this assumption holds, the market is currently forming a series of corrective waves, with targets near the 1.26 and 1.28 levels. The first two waves in this structure appear to be complete, while the third may conclude at any moment.

Since the euro is likely still forming a corrective wave, it makes sense to expect a similar structure in the British pound. A crucial factor to consider is that the Bank of England (BoE) is preparing for four rate cuts in 2025, whereas the Federal Reserve (Fed) does not plan to cut rates by more than 50 basis points. The UK economy has repeatedly disappointed markets, while the U.S. economy continues to boost confidence in the dollar. These factors should deter mass dollar selling and limit excessive pound buying.

GBP/USD declined 15 basis points on Wednesday, but the retreat from recent peaks is still too weak to confirm the end of wave C in 2. Currently, this wave appears fully formed: wave A in 2 and wave C in 2 both exhibit a three-wave structure. This suggests that a small upward move is still possible, but the overall wave structure indicates that a decline could begin at any moment. The key question is whether this will be wave D in 2 or wave 3. Either way, I continue to anticipate further downside, with the current peak and potential wave E in 2 serving as entry points for short positions.

The market had an opportunity to increase demand for the pound today following the release of UK inflation data. The Consumer Price Index (CPI) jumped to 3.0% y/y, exceeding the forecast of 2.8%. Core inflation also accelerated by 0.5%, reaching 3.7%, although markets were already anticipating this scenario. Regardless of whether traders were prepared, the fact remains that inflation surged unexpectedly. This suggests that the BoE may slow its pace of rate cuts in 2025, which could have provided support for the pound. However, if wave 2 is indeed complete, there is no fundamental reason for the market to continue buying GBP.

This image is no longer relevant

Overall Outlook

The wave structure for GBP/USD indicates that the downtrend remains intact, with the first wave already completed. The next step is to wait for a convincing set of corrective waves, which will help identify new selling opportunities. The minimum correction targets have already been reached at 1.26, with a more optimistic target near 1.28. At current levels, GBP/USD can already be considered for short positions, as wave C is approaching its end. However, it would be preferable to wait for confirmation signals, which may vary among traders.

On a higher time frame, the wave structure has shifted. The chart now suggests the formation of a downward trend, as the previous three-wave upward movement appears complete. If this assumption is correct, we should expect a corrective wave 2 or B, followed by an impulsive wave 3 or C.

Key Principles of My Analysis:

  1. Wave structures should be simple and clear. Complex patterns are difficult to trade and are often subject to revisions.
  2. If there is uncertainty about market conditions, it is better to stay out.
  3. There is never 100% certainty in price direction. Always use stop-loss orders for risk management.
  4. Wave analysis can be combined with other analytical methods and trading strategies for a well-rounded approach.
Chin Zhao,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD Analysis – March 17th

The 4-hour wave analysis for EUR/USD is at risk of transforming into a more complex structure. A new downward trend began on September 25, taking the form of a five-wave

Chin Zhao 17:34 2025-03-17 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, #Ethereum, and #Litecoin – March 17th

GBP/USD Since January, an upward wave has been forming on the GBP/USD chart. The wave structure analysis shows that this wave remains incomplete. After breaking through another resistance level

Isabel Clark 09:34 2025-03-17 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, #Bitcoin, and #Ripple – March 17th

Since February 3 of this year, the chart of the euro has been forming an upward wave zigzag. The wave structure analysis indicates that a correction is forming

Isabel Clark 09:23 2025-03-17 UTC+2

Weekly Forecast BasSimplified Wave Analysis for GBP/USD, AUD/USD, USD/CHF, EUR/JPY, Ethereum, and Litecoin on March 10th

Analysis:The upward wave that started on January 13th remains incomplete, forming a new segment of the dominant global uptrend. The pair is currently trading within a narrow range between opposing

Isabel Clark 09:26 2025-03-10 UTC+2

Weekly Forecast Based on Simplified Wave Analysis for EUR/USD, USD/JPY, GBP/JPY, USD/CAD, GOLD, and Bitcoin on March 10th

Analysis:Since early February, the euro has been forming an upward zigzag wave, marking the beginning of a new bullish trend. The pair has reached a significant potential reversal zone

Isabel Clark 09:20 2025-03-10 UTC+2

GBP/USD Analysis – March 5th: The Pound Benefits from Trump

The wave structure for GBP/USD remains somewhat ambiguous but still largely understandable. Currently, the likelihood of forming a long-term downward trend remains high. Wave 5 has taken a convincing shape

Chin Zhao 19:25 2025-03-05 UTC+2

EUR/USD Analysis – March 5th

The wave pattern on the 4-hour EUR/USD chart appears clear and structured. A new downward cycle began on September 25, forming a five-wave impulse structure. Two months ago, a corrective

Chin Zhao 19:23 2025-03-05 UTC+2

GBP/USD Analysis – March 4th

The wave structure of the GBP/USD instrument remains somewhat ambiguous but still comprehensible. At present, there is a high probability of forming a long-term bearish trend segment. Wave

Chin Zhao 18:35 2025-03-04 UTC+2

GBP/USD Analysis – February 25th

The wave structure of GBP/USD remains somewhat ambiguous, but overall, it is clear. Currently, there is a high probability of forming a long-term bearish trend, with only Wave

Chin Zhao 17:55 2025-02-26 UTC+2

GBP/USD Analysis – February 25th: The Pound is in No Rush to Decline

The wave pattern for GBP/USD remains ambiguous but still comprehensible. There is a high probability of forming a long-term downward trend, with the main uncertainty revolving around wave

Chin Zhao 14:04 2025-02-25 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.